Amid geopolitical uncertainty and domestic reshoring, the investments offers structural protections and tax efficiency.
By: Elise Ablin O’Brien, Director at Peakline Partners
Private credit has become a core allocation for many high-net-worth investors over the past few years, valued for its current income, diversification, and attractive risk-adjusted returns. But with confidence in the space shaken in recent months by headlines highlighting redemptions, advisors may question whether the asset class deserves a place in client portfolios going forward.
The answer is yes, but a targeted focus is required—one that prioritizes strategies aligned with policy tailwinds, structural protections, and tax efficiency. Traditional private credit has historically served this role, but increasing competition in direct lending has compressed spreads and reduced differentiation.
Against a backdrop of elevated rates, continued inflation uncertainty, and geopolitical strain, asset-backed private credit—particularly equipment leasing—offers a more defensive approach to private credit. It provides an additional layer of collateral protection that is distinct from enterprise-value-based underwriting.
Asset-backed loan investment vehicles are secured by tangible, revenue-generating equipment, These investments are typically short duration—around 36 months—and are generally fully amortizing, meaning investors receive principal and interest payments throughout the life of the investment. This structure creates a self-liquidating portfolio, where capital is returned steadily rather than being tied to a single exit event. In uncertain markets, that visibility and cash flow profile are especially valuable.
Domestic reshoring. U.S. economic policy trends make the case for equipment leasing particularly strong. The combination of tariffs, geopolitical realignment, and supply chain disruption has accelerated the push toward domestic reshoring. Companies are increasingly investing in U.S.-based manufacturing capacity across sectors such as industrials, defense, technology infrastructure, and energy to reduce supply chain risk and improve reliability.
As businesses build domestic manufacturing facilities, expand production lines, and purchase equipment, they require flexible capital solutions that avoid significant upfront expenditures. Leasing meets that need directly.
Accelerated Depreciation. In addition to macro tailwinds, tax policy is enhancing the attractiveness of this asset class. Recent legislative developments, including provisions under the One Big Beautiful Bill Act aimed at encouraging domestic investment and capital formation, have reinforced the benefits of investing in real assets through accelerated depreciation.
Equipment leasing sits squarely within tax-advantaged sectors that benefit from these policies. With investors increasingly focused on after-tax outcomes rather than nominal returns, equipment investments allow for the front-loading of depreciation deductions, which are passed through to investors. For taxable investors, this may create meaningful tax deferral and enhance after-tax yield.
Drawdown fund structure. While registered, open-ended fund vehicles may offer simplicity and the potential for liquidity, they generally package investments in structures that cannot pass through asset-level tax benefits to investors. Investors may receive income but miss out on depreciation deductions that could otherwise reduce taxable income and improve after-tax returns.
For qualified investors, a traditional drawdown fund structure may better preserve these benefits. A traditional drawdown fund can structurally pass through depreciation generated from equipment investments to investors, potentially creating tax deferral and improving after-tax outcomes. The structure allows investors to participate not only in the income generated by the investments, but also in the tax advantages associated with owning real assets.
Periods of economic uncertainty make strategies with strong downside protection, shorter duration, and consistent cash flow increasingly favorable. For advisors seeking to position high-net-worth portfolios for resilience, consistent cash flows, and tax efficiency, asset-backed credit is not just timely, it may represent the future of private credit.
This article was also published on Barron’s
Elise Ablin O’Brien is a Director at Peakline Partners. She manages Peakline Partners’ platform for private credit investing.
Peakline Partners, LLC is an SEC-registered investment adviser. Peakline provides investment advisory services strictly to investment vehicles investing in private capital, real estate, venture capital, and other investment opportunities.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
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